DXY; Potential Strengthening by CPI forecast

DXY

Considering the current economic indicators, the upcoming CPI report could reflect a continued trend of moderate inflation. The stabilization of the currency around 103 and the slight dip in stock market points from 5157 to 5128 suggest cautious but not pessimistic market sentiment, which may not exert strong pressure on the dollar. While GDP growth has slowed from 4.9% to 3.2%, the mild rise in unemployment to 3.9% is tempered by a healthy increase in Non-Farm Payrolls by 46,000, indicating resilience in the job market. This labor data could support consumer spending and subsequently influence inflation rates, albeit marginally given the recent decline in Retail Sales MoM from 0.4% to -0.8%. The maintained interest rate of 5.5% alongside a manageable inflation rate easing from 3.4% to 3.1% suggests that the Federal Reserve's current monetary policy stance is likely to hold, barring any unforeseen economic shifts. All these factors combined hint at a CPI report that's likely to align with current forecasts, which, if accurate, could sustain the DXY's level, as market participants see a steady economic outlook.

Comment:

Let's see what happens to the dollar after the Fed's decision; then we can have a clearer direction for the dollar. As of now, we have mixed economic indicators